In Berlin, treasury secretary talks up policies to spur demand

BERLIN (Reuters) - Treasury Secretary Jack Lew on Tuesday urged countries with a budget surplus to introduce policies to help domestic consumption, in what appeared to be a prod at Germany.

German Finance Minister Wolfgang Schaeuble (L) and U.S. Treasury Secretary Jack Lew pose before a news conference after talks in Berlin April 9, 2013. REUTERS/Tobias Schwarz

Lew was in Berlin for talks with his German counterpart. Germany has the euro zone’s biggest trade surplus and has in the past rebuffed pressure to shift policy to bring about a rebalancing of commercial flows in Europe.

“The driver for economic growth has got to be consumer demand ... policies to help to encourage consumer demand in countries that have the capacity would be helpful,” he said at a news conference with German Finance Minister Wolfgang Schaeuble.

Lew has pressed European officials to moderate austerity measures in order to boost growth, and called on surplus countries like Germany to boost their consumption to help pull the continent out of the doldrums.

Schaeuble and Lew tried to play down any differences in their views, however, with the German arguing that growth and budget consolidation were not mutually exclusive.

“Nobody, including in Europe, sees this contrast between fiscal consolidation and growth. Our common position is of growth-friendly consolidation or of sustainable growth, however you want to call it,” he told reporters.

Germany, Europe’s biggest economy, argues that budgetary rigor is not incompatible with growth, and is necessary to convince markets that governments are sticking to their spending diets in order to avoid another sovereign debt crisis

Lew emphasized that the United States wanted a strong Europe.

“As we continue to address many of our long-term challenges, our economy’s strength remains sensitive to events beyond our shores. We have an immense stake in a prosperous Europe,” he said.

He also said that there was a common interest in ensuring that tax havens did not skew a level playing field.

On his first official visit to Europe, Lew met European Union officials in Brussels and European Central Bank President Mario Draghi in Frankfurt on Monday. He will travel to Paris later on Tuesday to meet French Finance Minister Pierre Moscovici.

Lew is a budget expert, and close confidant to U.S. President Barack Obama, which may help in his dealings with European officials about deficits and debt.